A surcharge is an additional fee added to a customer’s bill when they pay with a credit card. This article explains what surcharges are, how they work, and the legal considerations based on your location.
What Is a Surcharge?
- A surcharge is a fee merchants add to cover the cost of accepting credit card payments.
- It is usually a percentage of the transaction amount (e.g., 3.5%).
- Surcharges are applied only to credit card payments, not debit cards or cash.
Legal Status of Surcharging
- Varies by State: Laws differ across states in the U.S. Some states allow surcharging, others prohibit or restrict it.
- Disclosure Requirements: Where allowed, merchants must clearly disclose surcharges to customers before payment.
- Card Network Rules: Visa, Mastercard, and other networks have specific rules about how surcharges can be applied and disclosed.
How to Check Surcharge Legality
- Research your state’s laws on surcharging or consult legal counsel.
- Review card network rules and your merchant agreement.
- Ensure transparent communication with customers if surcharging is implemented.
Best Practices
- Clearly display surcharge information at the point of sale and on receipts.
- Offer alternative payment methods without surcharge.
- Regularly review compliance as laws and rules may change.
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